Business continuation planning essentially involves active planning and engagement to derive the most value from your business whenever you, as the business owner, exit the business. According to the Family Business Institute, only about 30% of family businesses survive to the next generation. It’s important to plan how the business will continue once you are no longer involved.
To have an effective continuation plan, a business owner should be able to answer the following questions:
- Has successor management been identified and trained to operate the business? Has it been communicated to key employees, their family, and other parties who would have a vested interest in knowing and executing the plan?
- Would the business generate enough return for the owner and/or owner’s family?
- Is there a strong desire to establish or to continue family involvement in the business?
- Is a willing buyer for the business available?
- How much is the business worth? Has a third-party appraisal or valuation been done to determine the realistic value of the business?
In every case the owner is going to exit the business at some point. Planning for this eventuality will help insure a smooth transition and retention of the business.
If you have questions about this business continuation planning process or would like information on establishing and funding a buy sell agreement for your company, we can help.
Senior Vice President- Individual Insurance Services